Invest-NL believes that with targeted investments, the Netherlands can become a significant player in AI.

The message from Invest-NL, the national financing and development institution, is as sober as it is ambitious. Within five years, the Netherlands can play a competitive role in the world of artificial intelligence, but not by engaging in a battle over language models. That fight has largely been decided. The real opportunity lies in what follows. ‘Don’t follow the Americans and Chinese by developing large language models as well, but rather seek the niches,’ says Jelle Vaessen, deeptech fund manager at Invest-NL, in a recent interview. [1]

This vision forms the core of a new style of industrial policy. Instead of shooting in all directions, targeted investments are made in a cohesive ecosystem of companies that excel in the hardware that makes ‘next generation AI’ possible. It concerns the chips, the sensors, and the networks that enable AI to understand and influence the physical world.

The first niche: Energy-efficient AI on the chip

One of the key niches is the development of energy-efficient AI chips that can run directly on devices, also known as ‘edge AI’. While large language models require enormous, energy-consuming data centers, the demand for efficient, local computing power is growing. The International Energy Agency predicts a doubling of data center energy consumption in the next five years, which only strengthens the call for efficient alternatives. [1]

A perfect example of this strategy is the Eindhoven-based chip developer Axelera AI. This company, in which the Deep Tech Fund of Invest-NL invested €15 million, launched its ‘Europa’ chip in October 2025. [2] [3] This AI Processing Unit (AIPU) delivers 629 trillion operations per second (TOPS), computational power previously found only in data centers, but with a fraction of the energy consumption. The technology is so promising that the European Commission awarded the company a €61.6 million grant in March 2025 to strengthen European digital autonomy. [4] Axelera AI is seen as a serious European challenger to the American giant Nvidia in the field of edge computing.

The second niche: Photonics and the speed of light

Another crucial technology is photonics, where chips work not with electricity, but with light. This makes data traffic exponentially faster and more energy-efficient, an essential condition for increasingly complex AI applications. Here too, Invest-NL has taken a strategic position with a previous investment in Smart Photonics, also from the Brainport region in Eindhoven. [5] This company is one of the few independent producers of photonic chips in the world and is a key component of the European Chips Act, which aims to reduce dependency on Asian chip production.

The combination of companies like Axelera AI and Smart Photonics creates a unique Dutch ecosystem. One company develops the ultra-fast, energy-efficient AI computing cores, and the other provides the infrastructure to transport data at the speed of light. Together, they form the hardware backbone for the next generation of AI.

The third niche: AI that understands the world

The most visionary niche might be the focus on a new type of AI not trained on internet text, but on data from the physical world. Stefan Leijnen, AI expert at the University of Applied Sciences Utrecht and author of the ‘Deepdive AI’ report for Invest-NL, calls this ‘world models’. [1] These models are fed with data from cameras, radars, heat, and sound sensors, enabling them to understand the physical world. Consider AI that can drive autonomously, control robots in a factory, or monitor crop quality.

“That new type of AI, the so-called ‘world models,’ is not based on digital texts, like the large language models that OpenAI and Google are promoting,” says Leijnen. [1] He believes that Dutch companies, with their strong position in high-tech manufacturing and sensor technology, have a unique advantage here. It's no longer about who has the most text data, but about who can collect and process the richest and most diverse data from the physical world.

A new form of industrial policy

Invest-NL’s strategy is more than a series of isolated investments. It is a deliberate attempt to build a cohesive, sovereign European AI ecosystem, with the Netherlands at its heart. The idea of a ‘new-style AI giga factory’ is an example of this: not a centralized data center, but a network of smart devices and servers operating with Dutch chip technology. [1]

It is a long-term vision that requires patience and boldness. “We are only just beginning to explore the ecosystem,” Vaessen acknowledges. [1] But the course is clear. Instead of futilely playing catch-up with yesterday’s AI, the Netherlands opts for a leadership role in the crucial technologies of tomorrow. By focusing on the niches where we have historically been strong - hardware, engineering, and system integration - the Netherlands can become an indispensable link in the global AI chain. Not the largest, but certainly the smartest.

This article is an interpretation and analysis based on the original article "Netherlands can become a serious AI player with targeted investments, believes Invest-NL", written by Jan Fred van Wijnen and published in Het Financieele Dagblad on November 26, 2025.